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This is the tale of an incredible response to massive storm damage. It is a case study in how to do things right following a disaster.

The Valley of the Sun, the local name for the greater metro-Phoenix area, gets an average of just 28 days of rain per year and only 7 inches of annual rainfall. This compares to 100 days on average in the US and an average 37 inches of rain. So it was a totally unprepared region on October 5, 2010 that experienced a freakish hail storm that literally ripped a path across the most populated area of the state.

The daytime temperatures had been in the 105-106 F degree range the days before. On October 5, 2013, the temperature dropped from the high 80s to the the 50s in seconds. A thirty degree drop in just seconds was followed by a further drop down to the 40s. I was personally stuck in the third and most frightening wave. The first two hail storms passed earlier in the day. Around 5 pm, coming back from a meeting. I was in a Honda S2000 two seat sports car convertible with a canvas top.

The storm had seemed to pass when the sunlit day turned dark and hail the size of golf balls and softballs came crashing down. I was stuck on a highway on-ramp, surrounded by cars that started ramming each other in the suddenly icy road. I slid to a stop as it sounded like a mob hitting my car with baseball bats and shotgun blasts. I could not move to shelter as I was hemmed in by vehicles with a mini-van sliding to within inches of my driver door. The hail was coming from all directions. It hit my roof so hard that the hail was forcing the fabric down and hitting me inside. I had to lay across the passenger seat to get low enough not to be hit. I thought about fleeing the car but did not know if the hail could kill me if I left. I wondered what would happen if the roof ripped open or the glass started to shatter. It seemed like forever before the storm passed. In reality, the hail lasted about twenty minutes.

My car had every piece of metal damage and all the glass cracked. I had over 800 dents in my car, including a hail stone that had broke through the reflector on my trunk lid, through the trunk, and shattered the wiring inside. My roof was shredded. When my car was repaired, every external metal panel, glass, roof and lamp had to be replaced. It cost around $25,000 to repair and took four months to get back. My car damage and repair time was nothing compared to the damage wreaked upon the vehicles and buildings across Phoenix and the surrounding cities.

The storm had hailstones measured over 2 inches in diameter and caused $2.7 Billion in damage in less than an hour around 5 pm drive time for Phoenix commuters.

Paint damage

Siding damage

Literally, golf ball sized hail

AC damage

AC Damage

Roof Damage

Golf Ball of Ice meets windshield

AC damage

Metal on roof

AC damage

Tile damage

Hail claims percentage by zip code

Roof damage

Roof damage

Number of homes damaged in Phoenix area

Hail meets metal

Flagstones damaged

Car damage

Back windshield

Lawn after storm

Cars during storm

Not as scary as when it flies down at terminal velocity

Tree blown down in storm

Scott McCleary, of the Valley Schools Insurance Trust (VSIT), was on the front lines. VSIT is a joint purchasing pool for liability insurance for three very large school districts; Peoria Unified School District (PUSD), Deer Valley Unified School District (DVUSD) and the Paradise Valley Unified School District (PVUSD). Together, the school districts have over 100 campuses and thousands of school buses and maintenance vehicles. In addition to the three hail storms in one day, buildings were suffering flooding from both rain and from leaking roofs. Scott McCleary arrived at the Pioneer Elementary School campus first in the Peoria Unified School District.

Scott McCleary – VSIT

Pioneer had flooding damage, and VSIT’s top priority is always to mitigate damage and avoid school closures and disruptions. VSIT investigates, comes up with risk management plans, assists in securing vendors and pricing and coordinates with insurers and re-insurers. When Scott arrived he immediately scaled the building to check out the roof damage. Scott’s first impression was a bit of shock. After a career inspecting roof damage on buildings, this was the most extensive storm damage he had ever seen. “It looked like it had a million holes. I’d never seen anything like that.” Scott immediately got on the phone to Tom Bock, the Administrator for VSIT. “It looks like we have a lot of damage out here, and I’m only at the first campus.”

Tom Bock put into action a plan of attack that would succeed where many others have still not repaired damage as the second anniversary of the storm approaches. The school districts in VSIT pool their liability insurance and have a re-insurer for each incident starting at $100,000. The re-insurer for this storm was Travelers. Travelers was contacted immediately by VSIT and brought in. By the end of the first day, Scott and the on-site adjuster had walked, inspected and put into action mitigation at four campuses. Each campus has from several hundred to a few thousand students, hundreds of faculty, and multiple buildings.

After the first day, the Travelers Catastrophic loss Team (CAT) was flown in from New York. Over the next two months, 115 campuses were full inspected and close to 100 have hail damage to roofs, rooftop air conditioning units, shade structures, windows, skylights, light structures, and paint. Amazingly, out of around 4,400 solar panels, just seven were damaged. The damage to the vehicle fleets were also dramatic. Tops of school buses were dented while some three hundred support and maintenance vehicles were badly damaged. For Scott McCleary who usually manages around 125 losses per year, he was now faced with managing losses at 100 sites, each with multiple buildings, vehicles and problems.

Work started immediately on the most damaged sites, including Pioneer Elementary and the Sandra Day O’Connor High School, each of which had flooding damage. Thanks to the prompt action of VSIT, no school days were missed due to the hail damage at any of the 115 campuses. Critical to the team that would accomplish this and future storm inspections and repairs were Jeff Long, the Director of Facilities at the Deer Valley Unified School District and Jim Migliorino, the Assistant Superintendent of Business Services for DVUSD; Edward Gillam, the Director of Facilities for Peoria Unified School District and Michael Finn the Assistant Superintendent of Business Services for PUSD; and Cole Morris, the Director of Facilities for Paradise Valley Unified School District and Tom Elliott, the Assistant Superintendent of Business Services for PVUSD.

The following is an update letter sent out to members of Valley Schools, which include the Valley Schools Employee Benefits Trust (VSEBT), the Valley Schools Workers’ Compensation Pool (VSWCP) and the Valley Schools Insurance Trust (VSIT). Tom Boone is the Chairman and CEO. Congratulations on another outstanding year to the Valley Schools’ team!

Dear Member,

Let me start out by saying that we appreciate having you as a continuing member in Valley Schools. The following are some recent events at Valley Schools that may be of interest to you:

Valley Schools is constantly negotiating with all our providers to save you money on insurance. As a result, effective July 1, 2013, we changed our life insurance carrier to ING. This change saved 21% off basic life insurance rates for all members and includes a three-year rate guarantee. We also changed our Pharmacy Benefits Manager (PBM) to UHC/OptumRX which should result in a reduction of pharmacy costs of about 2%.

The audits for 2012 are complete and we have received an unqualified opinion. An unqualified opinion is the best possible audit outcome, meaning that there are no areas for concern, comment or revision. Since Valley Schools started in 1987, we have had unqualified opinions on all audits, every year. We are proud of our 25 years of clean audit findings. The 2012 audit reports were recently sent to all members.

National healthcare policy is changing rapidly and dramatically. The Patient Protection and Affordable Care Act (PPACA) passed in 2010 changes nearly every aspect of health delivery in the country. Valley Schools is committed to keeping our members informed and ready for this shifting regulatory landscape. We are providing quarterly briefings for all members to review all aspects of PPACA. We would strongly encourage your human resources, employee benefits staff, or others you may want to participate, to attend these meetings.

Again, for the 2013-14 fiscal year, Valley Schools had 100% retention of all current members. In addition, we welcome the Madison Elementary School District as a new member for FY 2013-14.

You should have already received a copy of our audit results. I am available to you at any time should you have any questions. All of our board meetings are posted and we encourage you to attend when your schedule allows it.

The Valley Schools Insurance Trust (VSIT) provides liability insurance to several large employers in the valley including very large school districts. Each year they are audited by several folks, including an independent audit and evaluation of reserves for liability. Once again, VSIT has passed with flying colors without any defects and with substantially more reserves than required. This program has saved each of its member employers around $1 million per year in premiums due to risk management, aggressive claims management, investigations and damage mitigation. As part of the trust, reinsurance is purchased to limit maximum liability per claim. The outstanding work of Tom Bock, Administrator for VSIT, has resulted in a high level of confidence in reinsurers. As they evaluate the financials, operations and expertise at the trust, they give it their highest ratings, resulting in lower costs for members. Outstanding job VSIT!

Here are some actual examples of savings at Arizona schools brought about through utility reduction. They were part of a project approved by Jim Migliorino, Associate Superintendent of Business Services at the Deer Valley Unified School District (DVUSD). The team conducting the utility study and reduction was Tim O’Brien and John Brunelle at the Valley Schools Insurance Trust (VSIT).